Corker urges Congress to refocus on housing finance reform

A top Senate Republican said on Tuesday that the possible threat of another massive taxpayer bailout for mortgage giants Fannie Mae and Freddie Mac highlights the need for Congress to tackle mortgage finance reform.

Sen. Bob Corker (R-Tenn.), a member of the Senate Banking Committee, said the result of a recent stress test by the Federal Housing Finance Agency (FHFA) serves as another reminder that lawmakers must deal with the last remaining issue from the 2008 financial crisis.

{mosads}”This stress test is another reminder of our housing finance system’s failed model: Taxpayers are on the hook during bad times, but investors benefit greatly during good times,” Corker said.

“Reforming Fannie and Freddie remains the last major piece of unfinished business of the financial crisis, and this news highlights the need for comprehensive housing finance reform,” he said.

On Monday, the FHFA released a report concluding that Fannie and Freddie might need a taxpayer-funded bailout of more than $125.8 billion from the Treasury Department if the U.S. experiences a severe economic crisis.

That amount is less than the FHFA’s $157.3 billion estimate made last year.

The Treasury Department maintains an account to cover shortfalls by Fannie and Freddie, and the latest forecast would leave $132.2 billion to keep the government-controlled companies afloat in an emergency situation.

More than three years ago, Corker and Democratic Sen. Mark Warner (Va.) introduced legislation for a measure to overhaul the mortgage giants that was approved by the Senate Banking Committee in May 2014.

But work on any legislation to overhaul Fannie and Freddie has since stalled.

There is an expectation from the mortgage and housing industry that Congress will aim to complete a plan for Fannie and Freddie within the next couple of years, about a decade after the financial crisis.

During the 2008 financial crisis, Fannie and Freddie were provided nearly $188 billion to remain solvent.